What to watch on U.S. economy on Thursday

U.S. jobless claims are expected to jump back up in the week ended Jan 19 after falling sharply to 335,000 in the prior week, according to economists surveyed by MarketWatch. They forecast claims to rise to 360,000 when the Labor issues the report on Thursday at 8:30 am. Eastern. The decline two weeks ago put claims at the lowest level in four years, but economists believe it stemmed from a seasonal quirk that often occurs after the holidays and is probably an aberration.

Yet if claims remained near the 335,000 mark, it would suggest a sharp improvement in the labor market. That could boost stocks and hurt bond prices.

Claims mostly hovered around the 360,000 in the second half of 2012.

Economists expect a preliminary flash manufacturing index for the U.S. released by Markit to dip to 53.0 in January after hitting a seven-month high of 54.0 in December. The index will be released at 9 a.m. Eastern. The Markit index is similar to the ISM manufacturing index and tries to gauge the health of the factory sector. It has been signaling stronger conditions than the ISM factory index for a few months.

An index of leading economic indicators is expected to rise 0.4% in December, signaling a modestly improving economy after the index declined 0.2% in November, according to economists surveyed by MarketWatch. While fiscal gridlock in Washington has taken a toll on consumer confidence, analysts expect sentiment declines to be more than offset by lower jobless claims, higher stock prices and interest rate spreads. The Conference Board will release its leading economic index at10 a.m.

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